United States v. Bader

• Decision Date: 03 May 2012
• Docket Number: No. 10–1263.,10–1263.
• Citation: 678 F.3d 858
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Thomas BADER, Defendant–Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

678 F.3d 858

UNITED STATES of America, Plaintiff–Appellee,

v.Thomas BADER, Defendant–Appellant.

No. 10–1263.

United States Court of Appeals,Tenth Circuit.

May 3, 2012.

Deborah A. Pearce, Law Offices of Deborah A. Pearce, New Orleans, LA (Charles Torres and Joseph Machatton, Charles H. Torres, PC, Denver, CO, with her on the briefs), for Defendant–Appellant.

Jaime A. Peña, Assistant United States Attorney (John F. Walsh, United States Attorney, and Andrew A. Vogt, Assistant United States Attorney, with him on the brief), Denver, CO, for Plaintiff–Appellee.

Before TYMKOVICH, BALDOCK, and HOLMES, Circuit Judges.

HOLMES, Circuit Judge.

Defendant–Appellant Thomas Bader appeals his convictions of distribution of human growth hormone (“HGH”), conspiracy to knowingly facilitate and knowingly facilitating the sale of HGH brought into the United States contrary to law, and conspiracy to possess with intent to distribute a controlled substance (testosterone cypionate). He asks this court to reverse his convictions or, at a minimum, to grant him a new trial. Mr. Bader also challenges the district court's forfeiture order requiring him to remit the $4.8 million in proceeds that he allegedly derived from his unlawful activity. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we affirm Mr. Bader's convictions for distribution of HGH and conspiracy to possess with intent to distribute testosterone cypionate, but reverse based upon instructional error his convictions for knowingly facilitating the sale of HGH imported into the United States contrary to law, and conspiring to do so. Further, in light of our reversals, we conclude that the forfeiture judgment cannot rest on its current statutory basis, but we leave to the district court in the first instance the task of determining the precise amount (if any) of the forfeiture judgment authorized by the remaining, upheld convictions. We remand the case to the district court with instructions to vacate the judgment and sentence and for further proceedings consistent with this opinion.

I. BACKGROUND

Mr. Bader, a licensed pharmacist in the State of Colorado, owned and operated College Pharmacy, a compounding pharmacy located in Colorado Springs, Colorado. In the context of this case, the precise definition of drug “compounding” remains in dispute. Nevertheless, the parties agree that College Pharmacy is involved in the process of purchasing, labeling, repackaging, and distributing drugs—including HGH—in finished dosages for patient consumption. ¹

In Spring 2004, Mr. Bader instructed Kevin Henry, a College Pharmacy sales representative, to locate an economical source of HGH for purchase and distribution.Mr. Henry located three manufacturers—all of them in China—and College Pharmacy began purchasing and importing HGH from these sources. Upon learning of potential contamination and potency issues with the HGH manufactured by these Chinese suppliers, Mr. Bader asked Mr. Henry to find a new HGH source. Pursuant to Mr. Bader's instructions, Mr. Henry contacted Bradley Blum, a domestic representative for Chinese HGH manufacturer Genescience, and College Pharmacy began to order and import HGH in bulk quantities from the Genescience facility in China.

Employees of College Pharmacy were then directed to repackage the imported HGH into smaller vials for distribution. Pursuant to College Pharmacy's repackaging protocol, employees copied the relevant HGH drug-instruction guides from a Food and Drug Administration (“FDA”)-approved version of HGH known as Saizen and included them with College Pharmacy's own HGH drug, which they labeled and sold as Somatropin. If asked whether Somatropin was FDA-approved, College Pharmacy employees were instructed to explain that the FDA did not have jurisdiction in China, and to reassure customers that the imported HGH was manufactured in an FDA-approved Chinese facility. College Pharmacy also issued several promotional letters and advertisements which implied that Somatropin had been approved by the FDA.

Between 2003 and 2007, Mr. Bader and his employees at College Pharmacy also distributed testosterone cypionate, an anabolic steroid, to individual body-builders and to body-building and “anti-aging” clinics. Among College Pharmacy's top “clients” was Peak Physique, a large anti-aging clinic that purchased HGH and testosterone cypionate via purchase agreements that required no prescription from a licensed physician. College Pharmacy also promoted and sold the steroid, along with Somatropin, at American Academy of Anti–Aging Medicine (“A4M”) conferences and trade shows, despite the fact that neither “anti-aging” nor “body-building” is a medically necessary use for these drugs.

On September 9, 2008, the government filed a Second Superseding Indictment in the District of Colorado charging Mr. Bader with a total of forty-three counts involving: (1) conspiracy to knowingly facilitate the sale of merchandise (HGH) brought into the United States contrary to law, in violation of 18 U.S.C. § 371; (2) mail fraud, in violation of 18 U.S.C. § 1341; (3) distribution of HGH, in violation of 21 U.S.C. § 333(e); (4) knowingly facilitating the sale of merchandise (HGH) brought into the United States contrary to law, in violation of 18 U.S.C. § 545; and (5) conspiracy to possess with intent to distribute a controlled substance (testosterone cypionate), in violation of 21 U.S.C. §§ 846 and 841. The indictment also indicated that the government would seek a forfeiture judgment in the amount of $4.8 million—the estimated amount of proceeds obtained by Mr. Bader due to his unlawful conduct—as well as forfeiture of the College Pharmacy building that allegedly had facilitated these crimes. The government subsequently dismissed Mr. Bader's mail-fraud charges, and Mr. Bader was tried on the remaining thirty-three counts beginning on January 4, 2010.

On February 2, 2010, a jury convicted Mr. Bader on thirty-two of the thirty-three counts of the indictment, acquitting him on one count of receiving illegally imported goods (Count Sixteen). The jury further found that Mr. Bader had obtained a sum of $4.8 million in proceeds from his illegal activities, and that the College Pharmacy building listed in the indictment had facilitated the crimes charged. The district court entered judgment on Mr. Bader's convictions and the jury's forfeiture verdict. Mr. Bader then filed an array of post-trial motions, pursuant to which the district court entered a judgment of acquittal on twenty-three of the HGH distribution counts; they involved prescriptions to minors, which had been validly issued by licensed physicians. Mr. Bader was subsequently sentenced to a below-Guidelines term of imprisonment of forty months and exempted from any payment of a criminal fine, the court having concluded that the forfeiture of $4.8 million and the pharmacy-building constituted an adequate financial penalty. This appeal followed.

II. DISCUSSION

Mr. Bader challenges on appeal each of his convictions and attacks the district court's forfeiture order. More specifically, Mr. Bader raises an array of arguments contesting the legal propriety of the jury instructions and the sufficiency of the evidence; alleges prosecutorial misconduct and entrapment by estoppel; and asserts violations of his Sixth Amendment rights and federal evidentiary rules. Mr. Bader asks us to reverse his convictions or, in the alternative, to grant him a new trial. We address below each of his challenges.

A. Alleged Instructional Errors

Mr. Bader alleges that the district court erroneously instructed the jury in three ways: (1) by including an “alternative prong on uncharged API [active pharmaceutical ingredient] importation” when it issued instructions regarding the charges of knowingly facilitating the sale of HGH imported contrary to law and conspiring to do so, Aplt. Opening Br. at 51; (2) “by telling the jury [that] all [of the] evidence about compounding was irrelevant,” id. at 47; and (3) by refusing to instruct the jury on applicable state pharmacy laws and his First Amendment right to advertise. The government contends that any error in the court's “alternative prong” instruction was harmless, that the district court was correct to reject Mr. Bader's compounding definition, and that the court properly refused to instruct the jury regarding state pharmacy dispensing regulations and Mr. Bader's First Amendment rights.

1. “Finished” HGH versus API

Mr. Bader's first argument pertains to two of his convictions—specifically, his convictions for knowingly facilitating the sale of HGH imported into the United States contrary to law and conspiring to do so (Counts Seventeen and One of the Second Superseding Indictment, respectively). These convictions implicate 18 U.S.C. § 545, which prohibits the smuggling of illegal goods into the United States by providing, in relevant part, that “[w]hoever fraudulently or knowingly imports or brings into the United States, any merchandise contrary to law, or receives ... buys, [or] sells” such merchandise, “knowing the same to have been imported or brought into the United States contrary to law” shall be fined or imprisoned for a maximum of twenty years. 18 U.S.C. § 545.

In the present case, Mr. Bader was charged in Count One with conspiring to knowingly facilitate the sale of HGH after importation “knowing the same to have been imported into the United States” contrary to several identified federal statutes: 21 U.S.C. § 331(a), which prohibits the introduction into interstate commerce of a misbranded drug; 21 U.S.C. § 352(f)(1), which relates to causing the introduction into interstate commerce of a misbranded drug that fails to bear adequate directions for use; 21 U.S.C. § 331(d), which prohibits the introduction into interstate commerce of an article that is in violation of section 355 of Title 21; and 21 U.S.C. § 355, which prohibits the introduction into interstate commerce of a “new drug”...